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Oil Prices Drop 3.5 Percent on US-Iran Peace Deal Hopes
(MENAFN) Oil prices extended their decline on Thursday as investors weighed the growing likelihood of a Middle East peace agreement that could ease supply anxieties and set the stage for the gradual reopening of the Strait of Hormuz.
International benchmark Brent crude dropped 3.5% to $97.5 per barrel as of 0715 GMT, while US benchmark West Texas Intermediate (WTI) shed over 3% to trade at $92 per barrel.
The selloff followed reports that Washington had transmitted a one-page memorandum of understanding to Tehran through Pakistani intermediaries, aimed at formally ending the conflict and establishing a framework for gradually reopening the Strait of Hormuz. Tehran confirmed it is reviewing the proposal and is expected to respond within days, though broader talks over Iran's nuclear program are reportedly slated for a later phase.
US President Donald Trump tempered expectations, however, cautioning that no agreement had been finalized and describing it as a "big assumption" that Iran would accept the terms. He further warned that military strikes could resume if Tehran failed to comply.
Prices faced additional downward pressure after Trump abruptly reversed plans to escort commercial vessels through the Strait of Hormuz. The reversal came after a key Gulf ally suspended US military access to its bases and airspace for the operation, media reported Wednesday, citing sources — a move widely interpreted as a pivot from military posturing toward diplomatic engagement.
The Strait of Hormuz serves as a critical chokepoint for global oil and liquefied natural gas flows, and weeks of regional conflict had sent prices sharply higher on fears of prolonged supply disruptions.
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